2016 January 2

Solar update

The solar panels have been working for about 5 months now. By the end of 2016 Jan 1, they had generated 1MWh of electricity. The panels produce a bit more electricity in the winter than I had estimated—on a clear day near the winter solstice, the panels generate about 4.5kWh a day—I had expected it to drop to 3kWh. Of course, in winter we get a lot of cloudy days (it’s our rainy season)—the worst day so far was 699Wh on 2015 Dec 21. My expectation of 3kWh was based on average insolation figures for Santa Cruz, so may still be a reasonable estimate once weather is taken into account.

The solar panels lowered my electric bill for the 5 months they’ve been installed by $118, saving about 11.8¢ per kWh:

month

2014

2015

2015–2014

August

$37.68

$19.83

$17.85

September

$38.84

$9.32

$29.52

October

$32.97

$10.34

$22.63

November

$29.69

$11.05

$18.64

December

$40.43

$10.70

$29.73

total

$179.61

$61.24

$118.37

The savings would be greater if if weren’t for the minimum charge of 32.854¢ a day for the grid connection (plus 8.5% local tax) or about $130.20/year. During the 5 months I’ve used about 200kWh more electricity than I’ve generated, but the net bill is still less than 0, because I generated the most electricity during peak summer hours (high value) and used the most during winter off-peak hours (low value). I expect that when “True-Up” day comes next August, that I’ll be close to 0 net kWh, but I’ll have net $ that will evaporate (they won’t credit them against my minimum payment).

The daily minimum payment went up right after I had the solar panels installed, which will length the time until the panels break even. A savings of $290/year in electricity costs will take about 48 years to break even (with no allowance for maintenance or the time-value of money). Note: I’ll have to do a more careful calculation of the exact cost of the solar project for my income taxes, as there is a 30% tax credit—I used $20k–30% for the estimates here, but I’ll have to talk with my contractor to figure out exactly which of the charges this summer were for the solar project, which for the window upgrades (also eligible for a different tax credit), and which were repairs that aren’t eligible for tax credits.

The 8 micro-inverters are only expected to last about 25 years and cost $160 each, so the maintenance costs are likely to average about $50/year, extending the break-even time to 58 years (unless retail costs for electricity go up).

Retail rates for electricity have not gone up much in California, but have risen a bit faster than inflation. In 1986, I was paying 6.485¢/kWh (Tier 1), which would be about 14¢/kWh in 2015 dollars. Off-peak winter prices for electricity, the lowest rate of the year, are 13.883¢+8.5%= 15.063¢/kWh. If I weren’t on a time-of-use plan, most of my electricity would be at 18.2¢+8.5%=19.747¢/kWh (Tier 1), and some would be at 21.5¢+8.5%=23.328¢/kWh (Tier 2). So the price of electricity has gone up about 1.15%/year in constant dollars over the past 30 years for the tiered plans (time-of-use plans are more available now and reduce rates for people like me by about 1/8, reducing the real rise in electricity costs to about 0.7%/year). This trend in slightly faster than inflation rate increases is not likely to continue for the next 30 years, though, as PG&E is not investing in more nuclear power plants, but is moving away from fossil fuels—wind and solar electricity are much more expensive capital investments, so the retail cost of electricity is likely to rise somewhat faster than it has for the past 3 decades. If it does jump up a lot, then the payback time for the solar panels would be reduced, but I don’t expect the break-even point to come in my lifetime.

It’s a good thing that we were putting in the solar power for environmental and aesthetic reasons, not financial ones!